Guarantees is when the auction house promises a certain price to the vendor, regardless of the outcome of the final bid. If the artwork fails to sell, then the auction house is obligated to pay the vendor the promised sum and keep the work, either re-offering it in a later day sale or selling it on the private market. If the painting sells under the guaranteed sum, then the auction house pays out the guaranteed sum to the vendor. If it sells for more, then depending on the contract, the ‘average’ or ‘upside’ would be split between the auction house and the vendor.
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